MOFSL stays Neutral on ITC at Rs 300 as GST 2.0 squeezes cigarette economics
Motilal Oswal flags 60-65% tax burden hike under GST 2.0 forcing ITC into phased ~35% MRP increases, risking FY27 cigarette revenue down 15% and EBIT down 19%. Non-cigarette FMCG, compounding at 10% CAGR over FY19-26, remains the structural bright spot cushioning the call.
What happened
MOFSL maintains Neutral on ITC with Rs 300 target, citing pressure on cigarette business after GST 2.0 hiked tax burden 60-65%. ITC is raising prices in phases
Key facts
- target price Rs 300
- FY27 cigarette revenue -15%
- FY27 EBIT -19%
- tax burden +60-65%
- MRP hike ~35%
- FMCG CAGR 10% FY19-26
Why this matters
GST 2.0 pressure on cigarettes accelerates the case for bolt-on FMCG acquisitions to scale the 10% CAGR non-cigarette portfolio and reduce regulatory concentration risk.